Shares of Sandisk Corporation (NASDAQ:SNDK) have been in a steep uptrend. Many are wondering where the rally end because they know it eventually will.

This is why SanDisk is the Stock of the Day.

Investors and traders love to talk about stocks they have bought. But unfortunately, most don't think about how they will exit or sell the position.  

If a trader or investor doesn't have a well-defined strategy, they are just guessing. This leads to emotional decision-making which leads to losses.

One exit strategy traders use is to have a price target and sell the stock if it reaches it. These targets can be prices that have previously been resistance levels. Stocks tend to hit resistance at levels that had been resistance before, so this would be a logical place to sell.

Another way to exit could be the use of a stop-out strategy. In this situation, the trader will sell if the stock reverses by a certain amount.

For example, if a stock rallies and then reverses by a predetermined amount, such as 5 points or 5%, the sell order would be triggered. With a stop-out a trader won't sell at the top, but the idea is that if it reverses by the specific amount or percentage, the downtrend will continue.

When a stock is overbought like SanDisk is, a trader may use a reduction in momentum as a trigger to exit.

The lower part of the chart is the Relative Strength Index (RSI). If the blue line is higher than the red horizontal line, like it is now, it indicates overbought conditions. A possible exit strategy could be to sell when the blue line turns lower.

As you can see, when this happened in November, it would have been a good time to sell.

Successful traders have their exit strategies planned before they even take positions. They don't guess, and this is why they profit.

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